Role of Finality Bridge in Bitcoin’s Future | Airdrop Alert Pro

In an exclusive interview with Beincrypto, Bitlayer’s key contributor Charlie Hu discussed the future of Bitcoin bridging technology, including the final bridge and BitVM bridge. These groundbreaking solutions are designed to solve Bitcoin in scalability, programmability and defi Integration, which provides a safer and more efficient way to move bitcoin assets in the blockchain ecosystem.

HU delves into the technical differences between traditional Multisig setup and the innovative minimal trust approach provided by BITVM Bridge. He also highlighted how the ultimate bridge enables Bitcoin holders to engage in Defi activities, ultimately contributing to the growth of the Defi space and improving liquidity.

The role of the final bridge and BITVM bridge

The ultimate bridge and BITVM bridge represent the next evolution of Bitcoin bridging technology. These solutions are designed to enhance Bitcoin’s capabilities Interact with decentralized finance (DEFI) ecosystem, due to Bitcoin’s lack of programmability, has traditionally been a challenge. Charlie Hu explained that the BITVM bridge is the third generation of Bitcoin bridging technology.

“BVM Bridge is the third generation of Bitcoin bridging solution technology. We wrapped Bitcoin, which relies on an older Multisig setup, which is a consortium of signers, and most people have to be honest. However, it is clear that we can’t rely on wrapped Bitcoin as a long-term bridging solution. We need a new generation of technology that has the least trustworthiness and does not rely on the current Multisig structure to bring Bitcoin liquidity from Bitcoin 1 (L1) (L1) to EVM (Ethereum Virtual Machine) or other programmable environments,” Hu told Beincrypto.

Previous system, Like a parcel of Bitcoinrelying on older Multisig settings, where a set of signers is needed to maintain honesty to ensure Safety. However, this structure has proven unreliable and puts users at potential risks.

“BITVM Bridge, by comparison, is more trusting. We just need to trust a signer to be honest, who can unlock funds through a two-way fixed mechanism,” Hu continued.

This improvement reduces the potential of malicious actors to harm the system, addressing vulnerabilities experienced by recent events such as Bybit Hack. Unlike the wrapped bitcoin, which relies heavily on Multisig settings, BITVM Bridge uses bitcoin scripts and a two-way fixation mechanism to ensure safer and more efficient transactions between Bitcoin 1 (L1) and Ethereum Virtual Machine (EVM) environments.

Enable Defi on Bitcoin

The limitations of Bitcoin Layer 1 in achieving decentralized financing are well known. Bitcoin L1 does not support smart contracts, which means it cannot promote loans, automatic market makers, Dispersed communicationor any other defi activity. Bitcoin UTXO-based cash system Designed primarily for payments, but it struggles with scalability and versatility in more complex situations.

To solve these problems, the ultimate bridge provides the solution by connecting Bitcoin to a more programmable, minimal trusted environment such as a Layer 2 solution.

“You can’t really do defi without a bridge. Bitcoin L1 has no smart contract capabilities or programmability. You can only pay. In order to enable Bitcoin Defi (a Defi use case where Bitcoin holders want to earn yields, participate in on-chain choices, liquid evaporation and other creative Defi use cases), you need to bridge to a programmable, minimal trusted environment (like a layer 2 solution),” Hu explained.

The scalability of Bitcoin L1 is subject to the ability to process only 7 transactions per second (TPS), resulting in network congestion. As users compete to pay for limited block space, this can lead to high fees and failed transactions.

“Many users have experienced this in the typical mint in 2023,” Hu recalls. People pay Gasoline feebut their transaction failed because they paid too little compared to others who paid higher fees. This led to a situation where everyone was trying to pay higher fees, but eventually, they burned bitcoin and the transaction still failed. ”

The ultimate bridge solves these problems by allowing bitcoin to interact with the layer 2 solution, allowing bitcoin holders to participate in DEFI activities and expand their transactions without the limitations of bitcoin L1.

The versatility and future of the ultimate bridge

One of the important advantages of BITVM bridges is its ability to bridge bitcoin assets to various ecosystems, including EVM and non-EVM chains. Through recent partnerships with chain stores For example, an arbitratorBITVM bridge position itself as the future of cross-chain interoperability, and BITVM bridge position itself as an indispensable component.

For example, sound use Solana VM, despite its indirect connection to Bitcoin, opens the door to Solana ecosystem integration.

“Our bridges are universal, supporting EVM and non-EVM chains, making them highly adaptable,” Hu said. “For example, Sonic (using Solana VM) even connects us indirectly to the Solana ecosystem.”

Going forward, the team plans to use Cross-chain Interoperability Protocol (CCIP) to integrate more blockchain networks. However, the main focus remains on the bridge of least trust from Bitcoin L1 to Ethereum L1. This forward-looking approach allows the ultimate bridge to provide scalability and compatibility with different blockchain ecosystems, thereby promoting greater liquidity and enabling Bitcoin holders to fully participate in DEFI activities across multiple networks.

The Bridge of Minimal Trust: The New Paradigm of Bitcoin

The term “trust minimization” is often used to describe the final bridge. While it is not entirely without trust, it greatly reduces dependence on multiple signers who ensure Bitcoin transactions.

In the past, bridging solutions such as packaging Bitcoin have relied on Multisig settings, which requires most signers to be honest. However, the final bridge only requires an honest signer from the operator of the BITVM bridge, and the dependence on trust is greatly reduced compared to older systems.

“People think it’s not totally trustless, and the controversy stems from that,” Hu admitted. “While some claim that it’s trustless, it’s more accurate to describe it as ‘the least trustless’. It’s not 100% trustless – it’s trustless. We still need to rely on an honest signature in the BITVM bridge operator. For example, if there are 100 operators, we only need an honest signature, which is 1%.

This shift in trust model is crucial to improving the security of Bitcoin bridging solutions. By reducing the number of trusted parties and relying on a single honest actor, ultimately the Bridge offers a more resilient way to ensure users can safely move their bitcoins in different blockchain ecosystems without worrying about a generalized collapse due to discord among signatures.

Final bridge and local production generation

The concept of local production generation is crucial to Bitcoin’s success in the Defi environment. Through the ultimate bridge, yield Bitcoin (Earnings BTC) becomes an active player in the Defi protocol, providing liquidity, points and loan opportunities. This yield generation is natural, chain-chain, which means it occurs directly within the Defi ecosystem, rather than relying on chain or tokenized yield systems.

“DEFI is essentially built around the core functions of liquidity provision, staking, Lending, etc.,” Hu explained. “We are bridging yield Bitcoin to provide one-to-one mint Bitcoin, which will enter various Defi protocols through our bridges. This allows BTC to participate in loans, liquidity pools, and other Defi activities to produce production.”

Earnings BTC holders become liquidity providers of various procedures, thus obtaining yields.

“This yield is natural, on-chain yield, not some tokenized or chain centrifugal system. It is the actual yield generated in the defi and does not depend on the incentive token or other artificial mechanisms.”

Integrating Bitcoin into DEFI opens up new possibilities for Bitcoin holders looking to engage in activities such as loans, liquidity pools and other advanced DEFI strategies, thus contributing to the overall growth of the Defi space.

The impact of the final bridge on a wider biased ecosystem

Mobility is a fundamental component of any Defi ecosystem and ultimately bridges play a crucial role in injecting liquidity into this space. By engaging Bitcoin holders in DEFI activities, the ultimate bridge helps increase the total value lock-in (TVL) across different protocols. Higher TVL translates into a more prosperous Defi ecosystem that ultimately benefits all participants, from individual users to developers and institutional investors.

“Simply put, without liquidity, you can’t have fefi,” Hu said. “No matter how innovative the agreement is, it can’t operate without liquidity. You need seed liquidity and you need more liquidity to attract users, whales and other sources.”

In the broader context of Bitcoin’s role in DEFI, the ultimate bridge is helping to grow Bitcoin from a payment-centric asset to a fully integrated player in the decentralized finance sector. As Bitcoin becomes increasingly accessible and available in DEFI, it will attract more liquidity and users, further strengthening the ecosystem and promoting its long-term growth.

The ultimate bridge’s target audience

The ultimate bridge serves a wide range of users, including various Defi participants, developers and institutional investors. In terms of retail, Bridge targets Web3 wallet users who are familiar with the concepts of lending and accumulation. For institutions, while discussions are still ongoing, partnerships for load-bearing products may be established, especially in the case of Bitcoin ETFs Grazing becomes a reality.

“We have campaigns for Chain Web3 wallet users who represent links to retail – DEFI users who understand concepts such as loans, points and other Defi use cases,” Hu said.

The team is also preparing for the possibility of Bitcoin ETF approval, ensuring they are ready to quickly interact with institutions after the regulatory environment is favorable.

“Once approval occurs, we need to prepare signed MOUS, reviewed use case proofs, case studies and record records so that we can quickly open up opportunities.”